Altquest provides advisory services to help clients build, manage, and exit perpetuities - self-sustaining business models. They use a proprietary methodology called Perpetuity Science to strengthen companies and maximize their valuation by increasing metrics like EBITDA and EBITDA multiples. Perpetuity Science explains how to build perpetuities through various phases and then sell or exit them at an optimal valuation through M&A transactions.

1. www.altquest.com
PERPETUITY
ADVISORY
We help clients build, manage, and exit perpetuities—supported by the proprietary perpetuity building, selling,
and buying methodology known as Perpetuity Science—that help the CEO/owner to realize the vision for the
corporation.
To build a perpetuity and then a growing perpetuity, companies must finely calibrate their current mix of assets,
capabilities, and processes. We combine expertise in perpetuity building, perpetuity management, and M&A to
strengthen companies and build sustainable value. Our rigorous Perpetuity Science methodology and
proprietary tools help our clients plan and execute moves to maximize valuation as characterized by an
increase in EBITDA, the EBITDA multiple, and a decrease in the discount rate (cost of capital).

2. www.altquest.com
PERPETUITY ADVISORY
Perpetuity Science is the body of knowledge, methodologies, and optimization models related to the building, selling, and
buying of perpetuities. It explains how perpetuities can be built, managed and exited from to create wealth. Perpetuity
science is a paradigm shift in business and finance in that it replaces the siloed roles traditionally employed by middle
market and public companies with a holistic methodology that integrates industrial and the capital markets roles into one
framework.
Instead of a disparate business roles along the lines of management, finance, accounting, marketing, etc., we have an
initial set of roles broken down in relation to the perpetuity, namely:
Build-side – the building of perpetuities (entrepreneurs, corporations)
Sell-side – the selling of perpetuities (investment bankers, wall street)
Buy-side – the buying of perpetuities (private equity, corporate M&A)
Within each of the three, we have various methodologies and optimization models that may touch on various subjects
such as accounting, finance, economics. By starting with Perpetuity Science, the CEO/owner can better synthesize the
various moving parts of industry and the capital markets.
When first learning about industry and the capital markets, one should first understand the nature of the perpetuity, which
is the basis for industry & the capital markets. The perpetuity can be modeled with the following formula:
Perpetuity value = CF / r
Where CF represents the benefit stream associated with the perpetuity and r represents the discount rate associated with
the perpetuity’s risk of receiving the benefit stream.
After understanding the nature of the perpetuity in general, we can then analyze the perpetuity within each industry. The
nature of the CF, r, value chain, and value being offered will be different. We investigate each industry according to these
variables by building an index for each industry and then sub-sector within the industry.
After building the index and sub-sector indices we can then begin analyzing the value chain and leaders in each part of
the value chain. We then build financial statement models for the leaders in each section of the value chain and
understand the drivers of performance in each section.

3. www.altquest.com
We analyze each leader or target in relation to the phases of perpetuity in terms of where they are now and the next steps
that they can take to move to the next phase. In doing so, one begins to think in terms of being a CEO. The CEO’s role is
to bring the company/opportunity through the stages of the perpetuity by building recurring benefit streams (i.e. cash
flows) and at the same time derisking those benefit streams. The key de-risking variables that drive perpetuity are the
following:
In doing so, the valuation of the perpetuity moves from backward looking towards forward looking and the valuation is thus
maximized (based upon a multiple of future earnings).
The CEO should thus be familiar with Perpetuity Science and the phases of the perpetuity.
As the perpetuity changes, the formula for valuing the perpetuity changes as well. There are five phas es of perpetuity
building. As we move through the phases, the role of the owner of the perpetuity becomes more passive and the valuation
becomes larger due to size of EBITDA increasing, EBITDA multiple increasing, and the discount rate decreasing. The
perpetuity becomes less dependent on the owner to exist and run as an organizational structure is formed coinciding with
the division of labor, processes are automated, and revenue becomes recurring.
The market for the perpetuity in its various phases is on the following page:

4. www.altquest.com

5. www.altquest.com
PERPETUITY SCIENCE METHODOLOGY
I. BUILD-SIDE
II. SELL-SIDE
III. BUY-SIDE
Ultimately, institutional funds require that a business become a perpetuity as characterized by recurring revenue and
efforts to diversify to bring down the cost of capital and thus increase value.
BUILD-SIDE
It is important for the CEO/owner to move through the phases of the perpetuity which an eye towards maximizing
valuation which coincides with an increase in both EBITDA and the EBITDA multiple resulting in an exponential growth in
valuation.

6. www.altquest.com
PHASES OF THE PERPETUITY:
PHASE I. SYNDICATION

7. www.altquest.com
PHASE II. JOB SHOP
PHASE III. PERPETUITY
PHASE IV. GROWING PERPETUITY
PHASE V. DIVERSIFIED
In addition to building a perpetuity, a perpetuity management capability is crucial for any organization, especially for those
that seek to realize their plans to become a perpetuity, growing perpetuity or diversified company.
We establish a perpetuity management capability within the organizing to ensure that the CEO/owner’s goals are realized
at that the corporation moves through the phases of development.

8. www.altquest.com
SELL-SIDE
As the CEO/owner’s goals are realized as represented
by the corporation moving through the phases of
development and an increase in value, the desire for
liquidity and the diversification of personal wealth
becomes desired.
The CEO/owner has now come to the point of exiting the
perpetuity at a maximized valuation. This means that it is
time for an exit from the perpetuity in the form of an M&A
transaction.
BUY-SIDE
As the CEO/owner’s goals are realized as represented
by the corporation moving through the phases of
development and an increase in value, the desire for
liquidity and the diversification of personal wealth
becomes desired.
The CEO/owner has now come to the point of exiting the
perpetuity at a maximized valuation. This means that it is
time for an exit from the perpetuity in the form of an M&A
transaction.
CONTACT
Michael Herlache MBA
Managing Director
mike.herlache@altquest.com